For Kenya and Africa more broadly, faster and better-planned urbanization offers a pathway to economic diversification, poverty reduction and rising per capita incomes. Writes Nicassio Karani Migwi, Founder, MD and CEO of Afromaximus Consult and Afromillenium Awards.
Kenya and much of Africa risk missing one of the most powerful engines of modern economic growth unless urbanization is accelerated and deliberately planned, as global evidence shows that cities drive industrialization, job creation and sustained GDP expansion far more effectively than rural-based economies.
Across the world, countries with high income levels and diversified economies are also highly urbanized, with industry and services accounting for more than 95% of output, while agriculture contributes less than 5%. Kenya, by contrast, remains only 30% urbanized as of 2024, according to World Bank data, despite clear evidence that its most urbanized and industrialized counties generate a disproportionate share of national income, manufacturing output and formal employment.
Unlocking Africa’s urban dividend will require a shift in development strategy.
Urban areas concentrate the key factors of production- labour, capital, land, technology and entrepreneurship- allowing firms to scale faster, innovate more easily and access deeper markets. This concentration supports the rapid creation of stable, higher-paying and diversified jobs that rural economies struggle to generate. Cities also benefit from denser and higher-quality infrastructure, including transport networks, electricity, ICT connectivity, water and sanitation systems, which reduce transaction costs and raise productivity across the economy.
The social advantages of urbanization further reinforce economic outcomes. Towns and cities host a higher density of schools, hospitals, public housing, mass transit systems and recreational facilities, alongside greater concentrations of skilled professionals, civil servants and security personnel. These conditions support human capital formation and improve quality of life, making urban centres magnets for investment and talent.
Global comparisons underline how far Kenya still has to go. While Singapore, Hong Kong and Kuwait are fully urbanized, and countries such as Belgium, Uruguay and Malaysia have urbanization rates exceeding 80%, Kenya’s urban share remains closer to that of lower-income economies. Even within Sub-Saharan Africa, Gabon’s urban population exceeds 90%. Kenya’s urban population growth rate of 3.7% reflects catch-up dynamics and rural–urban migration, but the pace remains insufficient to rapidly transform the structure of the economy.
Kenya’s economic composition reflects this gap. Agriculture, forestry and fishing accounted for more than 21% of GDP in 2024, while industry contributed just 16%, with manufacturing at a modest 7.6%. Services made up about 56% of output. Data from the Kenya National Bureau of Statistics show that counties with stronger urban and industrial bases- such as Nairobi, Kiambu, Nakuru and Mombasa- command significantly higher shares of GDP and manufacturing value added than predominantly rural counties, which remain trapped in low productivity activities and higher poverty levels.
International benchmarks further illustrate the structural shift associated with urbanization. In Singapore, agriculture contributes virtually nothing to GDP, while manufacturing and services dominate output. Malaysia combines a strong manufacturing base with a large services sector, while Qatar and Gabon leverage resource-driven industry alongside urban services. These patterns highlight the close link between urbanization, industrial capacity and income growth.
However, rapid urbanization without planning carries serious risks. Africa’s fast population growth, limited fiscal space and weak job creation capacity raise the likelihood that new urban growth will take the form of informal settlements rather than productive cities. In Kenya, more than 40% of the urban population lived in slums as recently as 2022. Access to safely managed sanitation and clean cooking fuels in urban areas remains far below comparator countries such as Malaysia and Singapore, emphasizing the infrastructure deficit.
Recognizing these challenges, several African countries have attempted to guide urban growth by relocating political capitals away from congested commercial centres, including Nigeria’s move to Abuja, Tanzania’s shift to Dodoma and Burundi’s relocation to Gitega. These efforts aim to spread urbanization more evenly and improve long-term planning, though results have been mixed.
Urban areas concentrate the key factors of production- labour, capital, land, technology and entrepreneurship- allowing firms to scale faster, innovate more easily and access deeper markets.
Africa already hosts around 700 million urban residents, and this number is projected to double to 1.4 billion by 2050. The continent is expected to see a sharp rise in million-plus cities and megacities, including Nairobi, placing unprecedented strain on housing, transport, utilities and labour markets if growth is not managed deliberately.
In Kenya, devolution under the 2010 Constitution was intended to spur competitive urban development across the 47 counties, with county headquarters evolving into engines of growth. While progress has been uneven, initiatives such as the UK-funded Sustainable Urban Economic Development (SUED) programme demonstrated how targeted planning, institutional capacity building and catalytic infrastructure investment can attract private capital and unlock urban potential in secondary towns.
More ambitious efforts, such as Laikipia County’s attempt to leverage a sovereign credit rating to issue an infrastructure bond, point to innovative financing pathways, even though political transitions and policy uncertainty stalled execution. These experiences highlight both the promise and fragility of urban financing reforms in Kenya’s current governance environment.
Unlocking Africa’s urban dividend will require a shift in development strategy. As argued by Olusegun Obasanjo and his co-authors in Making Africa Work, sustained growth will come not from primary commodity exports alone but from urban-centred industrialization, dense housing, efficient transport systems and strong links between cities and productive rural hinterlands.
For Kenya and Africa more broadly, faster and better-planned urbanization offers a pathway to economic diversification, poverty reduction and rising per capita incomes. Achieving this will require coordinated action by governments, municipalities, development partners, the private sector and capital markets to mobilize large-scale, long-term financing for urban infrastructure.
Without such deliberate intervention, the continent risks urban growth that deepens inequality rather than delivers shared prosperity.
